Rambo Business Practices: Why “Hustling” is killing SMEs

Words by Nkosana Mazibisa (Forbes 30 Under 30 & Mandela Washington Fellow Alumni)

These days everyone’s mobile phone number seems to be linked to a WhatsApp business account. While I am for supporting all small and medium-sized business enterprises (SMEs) and I respect the entrepreneurial zeal of our local youths, I have to say this clearly – “Creating a logo and a social media page does not make you an instant professional”. There is a crisis in small business start-ups caused by the gold rush towards entrepreneurship. Due to an almost none-existent labour market, archaic service providers, and poor marketing strategies, there are very few employment opportunities for graduates. Therefore, there is a significantly higher percentage of students or inexperienced entrepreneurs trying their luck at starting companies. However, whilst this might seem like the obvious solution, the gold rush has left many of the evangelists with theory and no actual experience.

Most of the SMEs I have encountered on social media are launched by aspiring entrepreneurs who have zero work experience. Their start-up is their first ever job. Well, as we all know, the starting part is easy, it’s just setting your brainchild into some kind of motion online. However, raising a child doesn’t start and end with giving it a name and obtaining a birth certificate. The youth are rushing into entrepreneurship with little or no appreciation of how to actually build a business. One guy I talked to painted a glossy picture of a “businessman” becoming an overnight success simply because he is providing a service everyone needs right now. How about tomorrow? Will we still need your services 3 months from now? How about 10 years down the line? This is one of the problems of what I term ‘Rambo Entrepreneurship’ – the lack of foresight. Very little effort is put towards building the foundations for the future. A good foundation consists of a good product, good customer service, a good reputation, and the potential for expansion. Ungayakhi indlu ongasoze uyenelise ukuyi-extenda. What’s going to happen when your business grows?

The second problem of the ‘Rambo entrepreneur’ is – a high turnover. I think young people are so over-exposed to images of success, luxury, and consumerism on social media, that they are no longer comfortable with failing. According to the Small Business Administration, only about half of all businesses survive five years or longer. For this reason, the public and private sectors have increasingly recognized the importance of supporting start-up businesses in these critical early years of growth, and continuously buying local products at a fair price. This is why it’s important to plan for the future. Not just future success but future failures. The moment young entrepreneurs accept failure not as a possibility but a probability, they will realize they will have to learn to adapt, revise, and adjust their original ideas and strategies along the way and not let emotions like ego and fear push them into shifting from one business venture to another overnight. Most of the youth encounter one challenge then they easily give up and hunt for the next trending gold mine. So, when you contact them on social media asking for a quote for solar panels, they tell you: “Sorry my man, I no longer do panels but ngilama-sanitisers lama-masks cheap”. “You” no longer do solar panels, but your description says “We”: What are the rest of the people in your company doing? This brings me to the most unfortunate part of Rambo business practices – the ‘Solo Proprietor’.

One of the major challenges that this group faces is the sole proprietor attitude of doing everything alone – aka solo. The “young business model” is centered on one person who literally is the pillar of the business from being shareholder to marketer to administrator to accountant. This is largely due to the cost of hiring skilled personnel, and the ability to share that long-term vision. In fact, some of these entrepreneurs try to do it all so they can get all the credit for inventing and executing the idea when it becomes successful. But unfortunately, credit does not create a better product or service, neither does it create more jobs. The ability to share a grand idea and incorporate another person’s efforts into the scheme of things, is just as powerful as conceiving it. You may have the most ground-breaking concept but if you fail to translate it, you cannot harness its full potential. So, while I applaud your efforts as the CEO, salesperson, marketer, driver etc of your business, I should not be expected to pay “you” all the so called “we’s” salaries because it was hard work for you to deliver the product to me because you work alone. Noone can multi-task everything and achieve consistent tangible results and in a SME, no-one expects you to. The ‘opportunity entrepreneurship’ gold rush happening in many developing nations – brought about by necessity – has made it difficult for the youth to grasp the process of creating businesses for the long-haul. So, let’s go back to the basics.

Before Rambos got into business in Africa, SMEs faced and will continue to face varied challenges to their growth and operations. Initially, most are poorly funded, not planned appropriately, markets are not assessed, products are not commercialized, the marketing is not adequate or imaginative, and good corporate governance is frequently lacking. It’s an uphill battle that starts with the 1st month’s trading costs wiping out a family’s life savings. From that point on, it’s survival of the fittest. Take for example local spaza shops such as Dube and Sons Superette, and how they have survived months of lockdowns with insufficient revenue. While their struggle to maintain overhead costs is admirable in a state of crisis, business requires innovation, agility, and adaptation strategies. Outbreaks and digital ubiquities are forcing businesses towards virtual markets and platforms, something which was and is still viewed as a luxury by many Africans, who still believe only in hard currency. Unfortunately, many African SMEs cannot manage such an unprecedented 360-degree turn; so, while others have closed, some are downsizing staff and stock. And in this gap steps in the opportunistic digital “businessman” who charges you the same amount as a seasoned qualified professional (or more), for substandard services that they are learning on the job. This is a dirty form of entrepreneurship.

Starting and running a business is a lifelong learning process, starting as early as elementary school and continuing through all levels of education. It is fostered by positive attitudes towards business and it develops organizational and risk assessment competencies. In Africa, there is a need to consider building a program to seed new cultural attitudes about what SMEs mean to the economy and the community. One key area of development is exposing potential and current entrepreneurs to other seasoned professionals. This can be in the form of short courses, workshops, employment or mentorship opportunities. This way they will be able to learn about the best business practices, business management, pricing, product development and product placement in the markets. They will also be able to understand market contractions and how to build a social capital base. Major businesses thrive on building networks and relationships, and in the digital era this is a much simpler process.

In summation, we need to develop creative public programs about basic entrepreneurship skills, business opportunities, communication skills, emerging markets, and new technologies – and embed them in the community. These programs can help develop the solutions we seek in African business and catapult the youth to succeed and prosper in their business ventures. Africa needs real innovators that can identify and establish new markets and provide critical services to neglected communities. These real entrepreneurs (and not the Rambos) will determine the kinds of goods and services that the ffuture demands – that will hopefully endure the test of time.

Editor’s notes:

Approximately 20% of new businesses fail during the 1st 2 years of being open, 45% during the 1st 5 years, and 65% during the 1st 10 years. Only 25% of new businesses make it to 15 years or more.

Sources:

www.businessknowhow.com/startup/business-failure.htmlhttps://www.investopedia.com/financial-edge/1010/top-6-reasons-new-businesses-fail.aspx

https://www.oberlo.com/blog/how-to-start-a-business

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